The Home Insurance Company, a Corp. v. Mercantile Trust Company, a Corp.

• Decision Date: 04 May 1926
• Citation: 284 S.W. 834,219 Mo.App. 645
• Parties: THE HOME INSURANCE COMPANY, a Corporation, Respondent, v. MERCANTILE TRUST COMPANY, a Corporation, and ST. LOUIS COUNTY BANK, a Corporation, Appellants.
• Court: Missouri Court of Appeals

284 S.W. 834

219 Mo.App. 645

THE HOME INSURANCE COMPANY, a Corporation, Respondent, v. MERCANTILE TRUST COMPANY, a Corporation, and ST. LOUIS COUNTY BANK, a Corporation, Appellants.

Court of Appeals of Missouri, St. Louis

May 4, 1926

Appeal from the Circuit Court of the City of St. Louis.--Hon. J Hugo Grimm, Judge.

AFFIRMED.

Judgment affirmed.

A. E L. Gardner for appellants.

Plaintiff's cause of action was based upon the words, "prior indorsements guaranteed," indorsed by defendants on the back of the draft in question and therefore was barred by our five-year Statute of Limitations (Section 1317, R. S. 1919) for the reason that these words so indorsed were not a "writing . . . for the payment of money or property," within the provisions of our ten-year Statute of Limitations (Section 1316, R. S. 1919). Whisler v Bragg, 31 Mo. 124; Lehner v. Roth, 211 Mo.App. 1; Lehner v. Roth, 295 Mo. 174; Curtis v. Sexton, 201 Mo. 230; Babler v. Rhea, 202 S.W. 604; Parker-Washington v. Dennison, 167 Mo. 199; Allewell v. Johnson, 253 S.W. 161; Brown v. Irving, 269 S.W. 686.

Abbott, Fauntleroy, Cullen & Edwards for respondent.

(1) An endorser warrants that the instrument is genuine and in all respects what it purports to be and that he has a good title to it and that the instrument is at the time of his endorsement valid and subsisting. R. S. 1919, secs. 851-852; Lieber v. Fourth National Bank, 137 Mo.App. 158; Farmers' National Bk. v. Merchants' & Traders' Bank, L. R. A. 1915A, 77; Oriental Bank v. Gallow, 98 N.Y.S. 561 (Affd. 81 N.E. 1170); Boardman v. Hana, 164 F. 527. (2) An action upon any writing whether sealed or unsealed for the payment of money or property may be brought within ten years. R. S. 1919, sec. 1316. (3) An action upon the warranty made by the endorser of the genuineness of a previous endorsement is an action upon a writing for the payment of money and therefore the ten-year Statute of Limitations (cited under point 2) applies to such an action and it may be brought at any time within ten years after the endorsement. Brown v. Irving, 269 S.W. 686; Lowe v. McDonald, 9 Mo.App. 590; Heines v. Tharp, 15 Ohio 130; Orthwein v. Nolker, 234 S.W. 787; Fidelity National Bank v. Hosea, 160 P. 960; Curtis v. Sexton, 201 Mo. 217; Parker-Washington Co. v. Dennison, 267 Mo. 199. (4) A promise implied by law from whatever is a written contract within the ten-year Statute of Limitations. This statute is to be given a broad interpretation. Bridges v. Stephens, 132 Mo. 524; Howe v. Mittelberg, 96 Mo.App. 490; Ball v. Cotton Press Co., 141 Mo.App. 26; State ex rel. v. Brown, 208 Mo. 613; Car v. Thompson, 67 Mo. 472; Miner v. Frees & Howard, 93 Mo.App. 569; Reyburn v. Casey, 29 Mo. 129; Kniseley v. Leathe, 256 Mo. 341. (5) The warranties upon which this plaintiff sued are actually in writing, the endorsement of defendant, Mercantile Trust Company, containing the words "prior endorsements guaranteed," and the endorsement of the defendant, St. Louis County Bank, containing the words, "all prior endorsements guaranteed." (6) Statute of Limitations does not begin to run until the forgery is discovered. Beatty v. Cruce, 200 Mo.App. 199.

DAUES, P. J. Becker and Nipper, JJ., concur.

OPINION

DAUES, P. J.--

Plaintiff brought this suit against defendants on their endorsements, in writing, on the back of a draft paid by plaintiff, by which endorsements defendants guaranteed a certain prior endorsement thereon, which prior endorsement in fact was not genuine. The case was tried before the court, a jury being waived, resulting in a judgment for plaintiff, from which defendants have appealed.

The facts are not in dispute, the sole question being one of law as to whether, on the record in this case, the five-year Statute of Limitations applies. The lower court struck from defendants' answer the plea of the five-year Statute of Limitations, an exception to the ruling being properly preserved, and this appeal strikes at this particular action of the court.

The facts and circumstances from which this controversy evolves are about as follows: Plaintiff brought this suit on September 1, 1920, seeking to recover the sum of $ 1843.44 from the defendants, the Mercantile Trust Company and the St. Louis County Bank, both being banking institutions. From the pleadings and the evidence, it appears that on October 20, 1910, one Emil Laufer and his wife, Elizabeth Laufer, owned a lot of ground in St. Louis county, Missouri. On this day they executed their note to B. C. Stevens, payable in three years after date, for the sum of $ 1750. They secured this note by executing a deed of trust to Stevens, conveying said lot to one R. H. Stevens as trustee for the benefit of said B. C. Stevens, the holder of said note, which deed of trust was duly recorded on December 27, 1910. After the deed of trust was executed and delivered, Laufer and his wife took out a fire insurance policy upon the improvements of said lot, the policy being for $ 1500. They assigned the policy to R. H. Stevens, Trustee, for the benefit of the legal holder of said note, with power in R. H. Stevens, Trustee, to collect any money that might come due under the policy, and to apply same on the payment of said note. The fire insurance policy was issued on February 20, 1911, to Elizabeth Laufer, the wife, by the Home Insurance Company, the plaintiff in this suit. On March 28, 1911, B. C. Stevens assigned the note to one C. H. Bechman, and afterwards, on April 17, 1913, a fire totally destroyed the property. To pay this loss, plaintiff on May 7, 1913, through its agent, issued its sight draft for $ 1500, payable to Elizabeth Laufer and R. H. Stevens, Trustee. The draft on the back bore the endorsement "Elizabeth Laufer," and "R. H. Stevens, Trustee," and was paid on May 12, 1913, by the plaintiff insurance company in the city of New York, plaintiff being the drawee. The course of the draft was as follows: It was deposited, first, in the St. Louis County Bank at Clayton, Missouri, by B. C. Stevens, who at that time was agent of the Home Insurance Company, plaintiff herein. B. C. Stevens received the amount of the face of the draft from the St. Louis County Bank, but instead of paying such amount to the persons entitled to the insurance, he appropriated the money to his own use.

Before the draft was presented to the drawee, and after the above endorsements were written upon same, the St. Louis County Bank on May 8, 1913, made the following endorsement upon same: "Pay Mercantile Trust Company, St. Louis, Missouri, or order--All prior endorsements guaranteed." When the draft reached the Mercantile Trust Company, and before forwarding same to New York, that trust company endorsed the draft as follows: "Pay the National City Bank, New York City, or order--Prior endorsements guaranteed May 9, 191-, Mercantile Trust Company, St. Louis, Missouri, Edward Buder, Treasurer." The draft was thereafter paid by plaintiff, and it then developed that the name "R. H. Stevens, Trustee," written on the back of the draft was not the signature of the said R. H. Stevens, but that same was placed thereon without his knowledge or authority. B. C. Stevens failed to pay over the proceeds of said draft which he had collected from the St. Louis County Bank to either Elizabeth Laufer or to R. H. Stevens, Trustee. Thereafter, Elizabeth Laufer and R. H. Stevens, as trustee, brought a suit against the plaintiff on the policy to recover for said fire loss, and in due time secured a judgment for the sum of $ 1743.44, which, upon appeal to this court, was affirmed and the amount subsequently paid by the Home Insurance Company to the insured. After about seven years had elapsed, that is to say from May 8, 1913, until September 1, 1920, the insurance company brought the present suit against the two defendants for the purpose of securing a judgment against them for the amount that plaintiff was required to pay to satisfy said judgment rendered against it in favor of Elizabeth Laufer and R. H. Stevens, the Trustee.

The form of the pleadings are not involved. The petition appropriately sets out all the facts and circumstances out of which the cause of action arises. It alleges that the plaintiff paid the draft when it was presented, upon the reliance had by plaintiff that said draft had been duly endorsed by R. H. Stevens, Trustee; that it relied upon the written guarantee of defendants that such endorsement was genuine, and then alleges that R. H. Stevens, Trustee, did not in fact endorse the draft, and that neither R. H. Stevens nor Elizabeth Laufer had received payment of said insurance money, and that the plaintiff was required at the end of the litigation to pay the amount of said policy to the insured. The petition further states that defendants conceded from plaintiff the fact that said draft had not been endorsed by R. H. Stevens, Trustee, although defendants well knew that said signature of R. H. Stevens, Trustee, was not his own genuine signature, and that plaintiff had no means of ascertaining whether said signature was genuine, or not, prior to June, 1915.

The answer, so far as is necessary for us to consider same here, is a general denial, with the plea that the plaintiff's cause of action against the defendants, if any, accrued on or prior to February 17, 1915, and that by reason of section 1397, Revised Statutes 1919, this action is barred by the limitation of time, same not having been filed within five years from the time said cause of action accrued.

Plaintiff moved to strike out the defense of the five-year Statute of Limitations. The court sustained such motion, and thus we have the law question presented for our determination.

So that the paper, being the draft and its endorsement, may be clearly before u...